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Transformed from aided education to a result oriented sector, Supplementary education still caters gaps that need to be filled by the future investors planning to have a piece of this enormous sector.
Tutoring, the largest segment in parallel education is expected to grow at a CAGR of 15% from $11 billion in 2014 to $16 billion in 2017, while test preparation will grow from $2 billion to $4 billion at a CAGR of 25% during the same period. Both tutoring and test preparation segments demonstrate students' willingness to pay for quality education and potent opportunities for investors.
WHY the route to franchise?
Himanshu Jain, Sen. V.P, Career Launcher: “Franchising helps to explore social connects and reputation of the franchisee in the respective city, thereby creating a sense of trust and confidence in the customer (students in our case). The local partner will have better access to schools and colleges than someone from the corporate office.”
What Franchisors Seek?
Suyog Penkar, C.F.O, Vidyalankar: “We have created a name for ourselves. We prefer our franchisees to be from an educational business background, so that he/she can use their network to increase the business.”
Himanshu Jain: “We partner with an individual not only because of the investment but more importantly for the intellectual and ethical value that he would bring to the organization's eco-system, which is much more valuable than any monetary investment.”
Himanshu Jain: “Anything varying from 1300 to 2000 sq ft of carpet area is required to open a Career Launcher institute. Suyog Penkar: “The carpet area required for a single classroom is 670 sq ft and for two classrooms it is 1000 sq ft.”
Himanshu Jain: “It will vary between Rs 3-20 lakhs depending upon various factors such as the centre location, student capacity, duration and the types of courses to be offered by the centre.
Suyog Penkar: “The investment needed to open a Vidyalankar institute differs between 15-20 lakhs depending upon the location selected.”
Breaking Even for the Franchisees
The break even largely depends upon the duration of the course and the number of students enrolled. Suyog Penkar:” Vidyalankar's most of the courses are for two years and one can expect the return on investment in more than a year.”
Himanshu Jain: “We have structured formal and non-structured informal training programmes. We assist in site selection, lease agreement, infrastructure, design of outlet, marketing, staff hiring and training, curriculum design and teaching etc.” Suyog Penkar: “We provide brochures, leaflets, posters, flex audio visual aids etc. Our core support team caters to all of the issues regarding academics, faculty management, test and performances, parental counselling.”
Choosing the Right Franchisor
Evaluate the number of students enrolled per month, visit the existing institutes, discuss about the support programmes provided by the franchisors, compare the franchisee units to evaluate the 'ROI' and other elements, etc.
Additionally there are a few pointers that one should keep in mind before taking up on a franchise:
Opportunity in your location
Your own ability to plough the market, build business and your own reputation
Reassure yourself about the brand's product basket and their past success
The Expansion Message
Suyog Penkar: “We are expanding in western India and the nearby regions. We are planning to open 100 more centers in the next 5 years to reach the students of Tier II & III cities in India.”
Himanshu Jain: “We aim to open at least 30 franchisees based institutes by the end of 2016.”